BS Project Jet Airways

7/29/2019 BS Project Jet Airways

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PROJECT REPORT

ON

JET AIRWAYS STRATEGY SHIFT FROM

DIFFERENTIATION TO LOW PRICING

Submitted to:

Prof. Sathyapriya

IBS, Hyderabad

Submitted by:

Prashant Rajan

Ankit Nigam

Ruchika Khanna

Shivani Karwal

Shekhar Menon

Kawale

Sakshi Singhal


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ACKNOWLEDGEMENT

The effective completion of this project has been a result of our synchronized effort and the

timely support of others. We would like to extend our gratitude to Prof. Sathyapriya, for her

effective and continuous guidance towards the completion of this project.

Every project requires a great deal of creativity and dedication. We as a team have really

joined our heads together to work on it. We faced many hurdles; however the group members

through their sincere efforts were able to overcome them.


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COMPANY: AN OVERVIEW

Jet Airways was incorporated as an air taxi operator on 1 April 1992. It started commercial

operations on 5 May 1993 with a fleet of four leased Boeing 737-300 aircraft. In January

1994 a change in the law enabled Jet Airways to apply for scheduled airline status, which wasgranted on 4 January 1995. Naresh Goyal who already owned Jet air (Private) Limited,

which provided sales and marketing for foreign airlines in India set up Jet Airways as a

full-service scheduled airline to compete against state-owned Indian Airlines. Indian Airlines

had enjoyed a monopoly in the domestic market between 1953, when all major Indian air

transport providers were nationalised under the Air Corporations Act (1953), and January

1994, when the Air Corporations Act was repealed, following which Jet Airways received

scheduled airline status.

Jet began international operations from Chennai to Colombo in March 2004. The company is

listed on the Bombay Stock Exchange, but 80% of its stock is controlled by Naresh Goyal

(through his ownership of Jets parent company, Tailwinds). It has 13,177 employees (as at

31 March 2011). In January 2006 Jet Airways announced that it would buy Air

Sahara for US$500 million in an all-cash deal, making it the biggest takeover in Indian

aviation history. It would have resulted in the country's largest airline but the deal fell

through in June 2006. On 12 April 2007 Jet Airways agreed to buy out Air Sahara for

INR14.5 billion (US$340 million). Air Sahara was renamed JetLite, and was marketed

between a low-cost carrier and a full service airline. In August 2008 Jet Airways announced

its plans to completely integrate JetLite into Jet Airways. In October 2008, Jet Airways laid

off 1,900 of its employees, resulting in the largest lay-off in the history of Indian aviation.

However the employees were later asked to return to work; Civil Aviation Minister Praful

Patel said that the management reviewed its decision after he analysed the decision with

them.Jet Airways and their rival Kingfisher Airlines announced an alliance which primarily

includes an agreement on code-sharing on both domestic and international flights, joint fuel

management to reduce expenses, common ground handling, joint utilisation of crew and

sharing of similar frequent flier programmes. On 8 May 2009 Jet Airways launched its low-

cost brand, Jet Konnect. The decision to launch a new brand instead of expanding the JetLite

network was taken after considering the regulatory delays involved in transferring aircraft

from Jet Airways to JetLite, as the two have different operator codes. The brand was

launched on sectors that had 50% or less load factor with the aim of increasing it to 70% and


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above. Jet officials said that the brand would cease to exist once the demand for the regular

Jet Airways increases.

According to a PTI report, for the third quarter of 2010, Jet Airways (Jet+JetLite) had a

market share of 26.9%

in terms of passengers carried, thus making it a market leader in India,

followed by Kingfisher Airlines with 19.9%. In July 2012, Jet Airways officially sought

government approval to join Star Alliance.In June 2011, Jet Airways banned carrying fish,

crab, meat, poultry products and liquid items as check-in baggage. Jet is the first domestic

airline to impose such a ban. Jet claimed that passengers complained of their baggage getting

soiled by seepage from bags containing meat products. Early in 2013, Etihad Airways, on of

the flag carriers of theUnited Arab Emirates based out of Abu Dhabi planned to buy a stakein Jet Airways. Jet announced that they were ready to sell a 24% stake to Etihad at US$330million. Earlier, in September 2012, the government of India announced that foreign airlines

can take up a stake of upto 49% in Indian airlines, thereby making this deal possible. Etihad,which had already purchased stakes in 4 other loss making airlines, said, they were

"concentrating on future potential rather than past performance", and were ready to take up

the stake in Jet. Initially, Jet announced that they were likely to sign the stake sale deal with

Etihad between January 22 and February 3, which they later confirmed to as January 25.

JETLITE:

JetLite was a wholly owned subsidiary of Jet Airways. It was established as Sahara Airlines

on 20 September 1991 and began operations on 3 December 1993 with two Boeing 737-

200 aircraft. Initially services were primarily concentrated in the northern sectors of India,

keeping Delhi as its base, and then operations were extended to cover all the country. Sahara

Airlines was rebranded as Air Sahara on 2 October 2000. On 12 April 2007 Jet Airways took

over Air Sahara and on 16 April 2007 Air Sahara was renamed as JetLite. JetLite operated a

fleet of mixed ownedleased Boeing 737 Next Generation aircraft and Bombardier CRJ-

200ER. JetLite ceased operations on 25 March 2012 after merger with Jet Konnect. The

Bombardier jets were phased out but the Boeings remained in service and operated for

JetKonnect. JetLite offered a buy on board service called JetCaf, offering food for purchase.

JETKONNECT:

JetKonnectis the low-cost brand of Jet Airways. It was launched on 8 May 2009.It operates

a fleet of Boeing 737 Next Generationaircraft. The rationale for launching Jet Konnect was


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to close down loss-making routes and divert the planes to more profitable routes with

higher passenger load factors. Jet already ran a low-cost airline named JetLite. According to

Jet Airways, the decision to launch a low-cost brand instead of expanding the

existing JetLite was taken to avoid the regulatory delays associated with moving excess

aircraft and assets from Jet Airways to JetLite, which have separate operating codes. Jet

Konnect offers a no frills flight where meals and other refreshments have to be purchased on

board. To identify if the flight is a full service or Konnect the flight numbers for Konnect are

in the series 9W 2000-2999. Jet Airways merged the JetLite brand into Jet Konnect on 25

March 2012. Jet Airways offers eight business class seats in Konnect to cash in on Kingfisher

Airlines' woes. In December 2012, Jet Airways placed an order for 5 ATR 72-600 aircraft to

"enhance regional connectivity." The first aircraft was delivered the same month, leased from

GECAS and was operated for JetKonnect.

EARLIER STRATEGY FOLLOWED BY JET AIRWAYS WAS:

To cater to high end customers by providing them with good quality service. To manage risk & short term crisis on account of any global financial risks. To manage short term spike in crude oil prices. To minimize passing the fuel price fluctuation to customers. To have network expansion mainly in Gulf and Middle East. To focus on improving service, reliability and on time performance. To focus to be the best in no frills sector. To measures to negate effect of unprecedented increase in prices of fuel. To maintain its leadership position in the Indian aviation industry.

REASONS FOR NEW STRATEGY: COMPETITION, MARKET SHARE AND

ECONOMIC CONDITION:

Jet airways earlier strategy involved keeping operations and growth in line with expected

Indian economy growth (7-8% p.a.) , manage risk and short term crisis on account of any

global financial risks, manage short term spike in crude oil prices and to minimize passing the

fuel fluctuation to customers. It then shifted its strategy to cater to the low cost segment and

came up with Jet Connect and JetLite. Why did Jet Airways make this move? The market

conditions had the low cost carriers like Indigo and Spice Jet lead and dominate the market.

So the main reason for this new strategy was to shift towards low cost and to not be behindthe low cost curve. The market trends show that more people go for the low cost carriers and


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it is global phenomenons to have prices go down. Jet has to be with the market and follow the

trends. A significant portion of the market is playing in the low cost arena. It plans to use 90

percent of its fleet for low cost carriers. Low fare carriers dominate and bearing that in mind

it simply went for the low cost carrier option. Jet Airways also came up with holiday

packages on its JetEscapes brand and these packages offer destinations within India. The

package is inclusive of accommodation and travel. Jet airways have 2 low cost subsidiaries:

JetLite and Jet Konnect.JetLite was a wholly owned subsidiary of Jet Airways. It was

established as Sahara Airlines on 20 September 1991 and began operations on 3 December

1993 with two Boeing 737-200 aircraft.JetKonnectis the low-cost brand of Jet Airways. It

was launched on 8 May 2009. It operates a fleet of Boeing 737 Next Generation aircraft. The

rationale for launching Jet Konnect was to close down loss-making routes and divert the

planes to more profitable routes with higher passenger load factors. The reason for launching

Jet Konnect was to shut down the loss-making routes and divert the planes to more profitable

routes with higher passenger load factors. JetLite was already established when Jet Konnect

was started. The decision to launch a low-cost brand instead of expanding the

existing JetLite was taken to avoid the regular delays related to moving excess aircraft and

assets from Jet Airways to JetLite, which have separate operating codes. Jet Airways chief

commercial officer Sudheer Raghavan said "Consumer demands are changing rapidly in a

dynamic global environment. We believe Jet Airways Konnect service will give us the

flexibility and speed to deploy capacity to meet these changing trends. As part of a strategic

rebranding exercise, Jet Airways consolidated its low fare service products under the

JetKonnect brand to simplify the groups service proposition and enhance brand recall. Jet

Airways (India) Limited and JetLite (India) Limited continue as distinct business entities

operating under their own airline operating permits. The aircraft was painted in JetKonnect

colours over time. JetKonnect offers Premiere services on certain routes where guests may

enjoy service identical to that enjoyed by Premiere guests on Jet Airways. This will be further

expanded in a phased manner.

As far as market condition and competition go, the trend is that the market has shifted to low

cost. More people are flying with low cost airlines such as Spice Jet and Indigo and also

flying more frequently as well. Jet Airways is the second largest airline in terms of revenue

and passengers carried. A lucrative industry is always a target for new investors. Thus, there

is a threat of new entrants. Jet Airways major competitors in the international market are

British Airways and South West Airlines. In the domestic market its competitors are Indian


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Airlines, GoAir and Indigo. Jet Airways had lost a major part of its market share due to the

emergence of new carriers. Some threats which Jet Airways faces is threat of new entrants,

fuel price hike and overseas market competition.

JET AIRWAYS NEW STRATEGY FOR JETLITE AND JETKONNECT:

As part of an evolutionary strategy to deliver a superior guest experience, JetLite, the wholly

owned subsidiary of Jet Airways India Ltd, has unveiled a new uniform for its staff. The

uniform, an important constituent of the companys comprehensive brand experience

strategy, has been designed by renowned Italian fashion designer Roberto Capucci. The new

blue and white uniforms with embroidered collars draw inspiration from the traditional

Jodhpuri style of Rajasthan, while maintaining the contemporary and vibrant outlook for the

airline, with the light blue colour representing the sky connoting optimism and calmness.

Guests travelling JetLite will also experience more seating comfort, all of which are

initiatives undertaken by the airline to offer a truly enjoyable and memorable flying

experience.

JetLites mission is to be the leading value carrier in India with a reputation for on-time

performance and reliability, while offering passengers true value, beyond mere low fares, in

terms of a quality product and friendly service. In line with this mission JetLite has evolved

to form an integral part of the product offering from the Jet Airways group, embodying

important brand values like warmth, reliability and courtesy, delivered by an attentive staff.

What we have sought to do is give our JetLite guests a more up-to-date expression of those

values, by giving a contemporary look to Indian traditions as a major point of differentiation

through the new uniforms. We are confident that JetLite will emerge as the carrier of choice

for our guests in the value carrier segment.

JetLite today also affords its guests enhanced connectivity across more than 66 domestic and

international markets through a code share partnership with Jet Airways. The code share

partnership has enabled both the carriers to optimally leverage their respective networks.

With this partnership, Jet Airways JetPrivilege (JP) members travelling on these code share

flights can also avail of a range of JP benefits, including the accrual of JPMiles based on class

of travel. JetLite currently flies to 25 domestic destinations and 2 international destinations

(Kathmandu and Colombo), operating over 110 flights a day, and plans to further enhance its

connectivity through effective network alignment.


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The airline has also made significant improvements to rank amongst the top performing

scheduled domestic airlines on the critical service parameter of On Time Performance.

JetLite posted an on time performance of 86.3% in June 2010 and 89.9% in May 2010 to

signal carriers enhanced reliability.

JetLite has also been consistently profitable over the last few quarters, which is a result of the

airlines cost initiatives, higher revenues due to fleet and network realignments as well as

significant improvements in service, reliability and on time performance. This is clearly

reflected in the significant improvement in JetLites operating margins and revenue

passengers. The airline ferried over a million guests for the three months ended June 2010.

Thus, improved services, enhanced reliability and code shares with Jet Airways, have all

enabled the airline to improve its penetration of the travel market in India. The fresh

induction of new Boeing 737s in a phased manner, to replace the existing fleet of 6 CRJs will

further added to the airlines capabilities.

Other measures undertaken by JetLite to give its guests an enhanced brand experience

include the introduction of Jet Caf a menu plan on domestic flights. This was followed

with the introduction of a new interactive website, which features a state- ofthe-art online

booking engine. A move that has allowed JetLite to afford its guests a flexible web-sale

solution with a clear road map to cater to the increasing e-commerce activities in ticket

purchasing pattern in the Indian market.

MARKETING STRATEGIES

JetLite

Parent Company Tailwinds Limited

Category Indian domestic sector

Sector Airlines

Tagline/ Slogan Emotionally Yours


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USP Value Airline

STP

Segment Cost Conscious Passengers

Target Group Lower Middle Class / Middle Class

Positioning Value Airline

SWOT Analysis

Strength

1. Strong Backing by Promoters

2. Positioned as a value Airline

Weakness 1. Competition from LCC and Premium Airlines

Opportunity

1.Positioning between LCC and Premium can get them

passengers from both segment

Threats

1. Growth of LCCs

2. Rising Fuel Costs

3. Rising Labour Costs

Competition

Competitors

1. Go Air

2. Spicejet

3. Kingfisher Red
http://www.mbaskool.com/brandguide/airlines/387-go-air.htmlhttp://www.mbaskool.com/brandguide/airlines/538-spicejet.htmlhttp://www.mbaskool.com/brandguide/airlines/537-kingfisher-red.htmlhttp://www.mbaskool.com/brandguide/airlines/537-kingfisher-red.htmlhttp://www.mbaskool.com/brandguide/airlines/538-spicejet.htmlhttp://www.mbaskool.com/brandguide/airlines/387-go-air.html


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NOW JETLITE TO JETKONNECT

Jet Airways Konnect links seven major metros- Mumbai, Delhi, Chennai, Bangalore,

Hyderabad, Ahmedabad and Kolkata - with several destinations across India, operating over

200 flights daily.

Konnect Select is a premium economy product introduced on certain Jet Airways Konnect

flights. This new front cabin class features wider and more comfortable seats, with a 40 inch

seat pitch. The services include complementary in-flight reading material, a welcome drink,

and complimentary hot meals on-board. Jet Airways, Jet Airways Konnect, its all-economy,

no-frills service, and JetLite have a combined fleet strength of 112 aircraft and operate over

500 flights daily.

As part of a strategic rebranding and restructuring exercise announced last July, Jet Airways,

on Monday, said, effective March 25, its low-cost arm JetLite would cease to operate, after

being merged with the other no-frills brand JetKonnect.

Effective March 25, JetLite will cease to operate separately, but will come under the

JetKonnect brand, enabling guests to avail themselves of a single superior in-flight product in

the full service (Jet Airways) and low-fare categories.

Jet Airways and JetLite would continue as distinct business entities operating under their own

airline operating permits, Mr. Raghavan said, adding that to achieve brand consistency,

JetKonnect will be the dedicated low-fare service with a mixed fleet of Boeings and ATRs to

operate on the metro, tierII and III routes.

Explaining the rationale behind the merger, Mr. Raghavan said, The launch of JetKonnect is

the culmination of a well-coordinated effort and arises from the fact that since its inception inMay 2009, JetKonnect has proved to be a successful model. We thought it best to consolidate

our product in the low-fare segment with a single brand JetKonnect, for enhanced brand

recall.

The airline was also looking at opportunities to optimally deploy and cross-utilize common

resources of Jet and JetLite wherever possible and this rebranding exercise will help further

in synergizing our collective operations. Though low-cost, JetKonnect, he said, would offer

premiere services on certain routes, where guests may enjoy service, identical to that enjoyed


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by the full-service parent Jet. This would be further expanded in a phased manner. The

cockpit and cabin crew would be in the same uniform, as their counterparts from Jet.

AWARDS AND ACHIEVEMENTS

Best First-Class Service in the World award at Business Travellers 20th annual Best inBusiness Travel awards

Best Business Class & Best Economy Class at the Business Traveller Awards Best Program of the Year by Freddie Awards 2007 & 2006 Best Elite Level for the second year in a row, at the 21st Annual presentation ceremony

of the Freddie Awards 2008

Best Overall in Entertainment at the Avion Awards 2010 India's Popular Domestic Airline at the SATTE 2006 Awards Indias Airline at the World Travel Awards, 2006 Best Technical Despatch Reliability by Beaver 2002 Best Cargo Airline of North Asia by Cargo Airline of the Year Awards Best Domestic Airline award for the 1st consecutive year and the 5th time in the past two

years at the 18th TTG (Travel Trade Gazette) Travel Awards 2007

Indias Most Respected Company in the Travel and Food Sectorby Businessworld 2003 Best Long Haul Carrier ex-Brussels award at the Tm Travel Awards 2009. Best Eastbound Airline from India and Best domestic Airline in India awards at the

Abacus Tafi Awards 2009.

Business Travellers Best Indian Airline Award in London.

CONCLUSION:

JetAirways has established itself as the one of the most trusted Airlines in India. It has

always endeavored to provide quality services to each segment of the society. It has not only

shifted its strategy from differential pricing to low pricing but has also done no compromise

in its quality and safety. Its new strategy has shown good result on the companys balance

sheets and will do the same in future. It stands apart from other airlines and it means what it

says The Joy of Flying.

Documents

BS Project Jet Airways